Diabetic nephropathy (DN) is currently a leading cause of end-stage renal failure worldwide. Gremlin was identified as a gene differentially expressed in mesangial cells exposed to high glucose and in experimental diabetic kidneys. We have described that Gremlin is highly expressed in biopsies from patients with diabetic nephropathy, predominantly in areas of tubulointerstitial fibrosis. In streptozotocin (STZ)-induced experimental diabetes, Gremlin deletion using Grem1 heterozygous knockout mice or by gene silencing, ameliorates renal damage. To study the in vivo role of Gremlin in renal damage, we developed a diabetic model induced by STZ in transgenic (TG) mice expressing human Gremlin in proximal tubular epithelial cells. The albuminuria/creatinuria ratio, determined at week 20 after treatment, was significantly increased in diabetic mice but with no significant differences between transgenic (TG/STZ) and wild-type mice (WT/STZ). To assess the level of renal damage, kidney tissue was analyzed by light microscopy (periodic acid-Schiff and Masson staining), electron microscopy, and quantitative PCR. TG/STZ mice had significantly greater thickening of the glomerular basement membrane, increased mesangial matrix, and podocytopenia vs. WT/STZ. At the tubulointerstitial level, TG/STZ showed increased cell infiltration and mild interstitial fibrosis. In addition, we observed a decreased expression of podocin and overexpression of monocyte chemoattractant protein-1 and fibrotic-related markers, including transforming growth factor-β1, Col1a1, and α-smooth muscle actin. Together, these results show that TG mice overexpressing Gremlin in renal tubules develop greater glomerular and tubulointerstitial injury in response to diabetic-mediated damage and support the involvement of Gremlin in diabetic nephropathy.